Old Sears to transform into new site for startups
Rice University leads effort for Midtown landmark to become tech innovation hub
Rice University will transform the former Sears property in Midtown into an innovation center for technology companies as part of a broader effort to spur on the local startup community in the wake of Houston’s failed bid for Amazon’s second headquarters.
The four-story, 190,000square-foot landmark retail center and surrounding parcels of land will be renovated into a startup incubator featuring coworking spaces, classrooms, offices, as well as as restaurants, cafes, shops and other amenities.
The $100 million redevelopment, formally announced by university, city and business leaders Thursday morning, would revitalize a long-neglected stretch of Main Street by attracting new technology companies and venture capital firms. It also would help the region further diversify from its blue-collar roots.
“We can no longer be in the shadow of Chicago or Silicon Valley,” Mayor Sylvester Turner said, adding that Houston has lagged in attracting startups. “We’ve got to tap into our collective resources, our collective talents and collective brainpower to compete globally.”
City and business leaders have long envisioned a centralized tech
hub where a creative workforce can collaborate on cutting-edge technologies and tap into academic, financial and business expertise on site. The innovation would focus on such core industries as energy, health care, data and logistics.
Thursday’s announcement sprang from a yearlong effort to make that vision a reality. The leaders convened two task forces, commissioned consulting firm Accenture to develop a strategic plan and toured several technology hubs around the world, including 1871 in Chicago, Tech Square in Atlanta and Tech City in London.
However, when Amazon eliminated Houston in the first round of candidates for its HQ2 earlier this year, it exposed the city’s chronic shortcomings in attracting technology companies and accelerated plans to develop an innovation district to foster startups.
Houston was the largest city nationally to be taken out of the running for the e-commerce giant’s coveted $5 billion campus and 50,000 jobs.
“I think there is a growing realization that Houston needs to act and act quickly to build up the digital economy,” said Bob Harvey, president and CEO of the Greater Houston Partnership. “The Amazon result served as a catalyst for much more immediate action than we had previously anticipated.”
Rice drives effort
Rice Management, which oversees the university’s $5.8 billion endowment, last fall bought out the remaining 28 years of Sears’ 99-year lease at 4201 Main and acquired three adjoining acres that includes Fiesta Mart, the empty Sears Automotive Center and parking lots, in a last-minute play to accommodate Houston’s bid to land Amazon.
Even before Amazon’s request for bids, Rice had imagined turning the 9.4-acre property into an innovation hub. The university now is spearheading citywide efforts to bolster Houston’s startup economy.
“Our success as a university depends in large part on Houston’s success,” said president David Leebron. “It’s important to Rice that Houston gain the recognition as a place of innovation and entrepreneurship that will advance the economy, create jobs and raise the city’s profile.”
The Rice investment arm will fund the innovation district’s creation, but Leebron stressed this is not just for the school but for the entire city. The university has sought partnerships with other local higher education institutions, including the University of Houston, Houston Community College, University of St. Thomas, Texas Southern University and Lone Star College. It has yet to have conversations with Texas A&M University or the University of Texas.
The overall vision, still being developed, would place the hub at the heart of a so-called “innovation corridor,” a roughly fourmile stretch between the Texas Medical Center and downtown that city and business leaders hope to populate with startups.
Rice and its partners were drawn to Midtown due to its proximity to light-rail lines, downtown companies, other universities, museums and the Texas Medical Center. The neighborhood’s Millennial population and its concentration of apartments, restaurants and nightlife is well suited to attract startups.
A slew of community partners came together on the project.
Station Houston, a downtown incubator with more than 300 member companies, will be in charge of operations and organizing networking events to create a community of entrepreneurs.
The new, nonprofit Houston Exponential was created by city and business leaders to raise venture capital and coordinate efforts to build a stronger startup ecosystem.
TMCx, a medical startup accelerator managed by the Texas Medical Center, will place a data science division in the center.
Universities will be tapped to offer coding classes and workforce training to educate students for jobs of the 21st century.
“Startups want to be in a place that’s cool and welcome, and where they get all the resources they need to create,” said JR Reale, co-founder and CEO of Station Houston. “Those are the biggest drivers to activate a community.”
The yet-to-be-named technology center on Main will be designed and developed by Hines in partnership with architects Gensler and James Carpenter. The first phase of construction is expected to be completed by early 2020.
New vision for historic site
Developers and architects are working out the details for reimagining the former department store as a high-tech work space. The startup incubator will charge varying rents to students, startups and more mature companies.
At the same time, developers plan to restore the iconic Sears building’s art deco facade — covered with a metal slipcover in the 1960s — and preserve the store’s original terrazzo floors, antique machinery and 1930sera interior murals depicting Houston history. When the Sears opened in 1939, it was one of the first department stores in Texas to feature air conditioning and escalators.
Developers plan to add windows and light wells to bring more natural light into the building. James Carpenter Design Associates, a New York-based architect recognized for its distinctive use of glass and natural light in its projects, was tapped to accomplish this task.
Ultimately, the innovation district’s planners hope the new technology hub will propel Houston into a top city for digital startups. Houston Exponential has set out aggressive goals for the city to become a top-10 innovation ecosystem, generate $2 billion in venture capital annually and create 10,000 new technology jobs a year by 2022.
Although Houston faces several challenges, such as creating a pipeline of technology workers, the innovation district will be a key first step toward achieving those goals, said Gina Luna, chairwoman of Houston Exponential and the group’s interim executive director.
“The momentum is really starting to build,” Luna said. “The fact that this is under way and being developed further accelerates that momentum. It’s a new era of collaboration to accomplish this goal.”
John Kennedy, a 19-year-old Houston entrepreneur who founded an education technology startup called Mesa Digital, attended the innovation district’s announcement Thursday. His company is a member of Station Houston and plans to take at the space at the new center. Startup incubators and accelerators are instrumental for young businesses looking for seed funding and mentors, he said.
Though he plans to step away from his company after he enrolls in the University of North Carolina later this year, Kennedy said he is excited for his small business to grow inside the new innovation district and beyond.
“We’ve gotten so much value out of Station Houston,” Kennedy said. “But our goal is to expand. We want to outgrow these places.”